The Presidential Second Term Curse

On Jan. 21, Barack Obama was sworn in for his second term as President of the United States. Presidents entering their second term may hope that the job will be easier the second time around, but after a draining election season the president may find himself in a rough patch that previous presidents have had to face as well: a grueling second term.

The Presidents
Eleven presidents have served at least two terms since 1900, and despite the high hopes and powerful campaign rhetoric, the prognosis is that second-term presidents often leave office with economies in worse shape than when their term started.

The presidents who secured a second term - Theodore Roosevelt, Woodrow Wilson, Calvin Coolidge, Franklin D. Roosevelt, Harry S. Truman, Dwight D. Eisenhower, Lyndon Johnson, Richard Nixon, Ronald Reagan, Bill Clinton and George W. Bush – rarely faced the same circumstances as their forbearers. While most of these presidents didn’t have to face war, famine and pestilence, many second terms lacked the honeymoon period that they may have expected.

While each entered office with approval ratings north of 50%, that rating has dropped rapidly over the course of the last century. At the same time the popular vote margin of victory has also closed between the two major political parties. All reelected presidents elected after FDR, save for Reagan and Clinton, exited the Oval Office with a lower approval rating than when they first walked through the door.

It’s the Economy
Why have Americans frowned upon second term presidents so much? Most issues boil down to the economy. Nine presidents were in office during recessions: Theodore Roosevelt (a recession and the Panic of 1907), Woodrow Wilson (two recessions), Calvin Coolidge (two recessions), Franklin D. Roosevelt (the Great Depression, along with several interspersed recessions), Harry S. Truman (two recessions), Dwight D. Eisenhower (three recessions), Richard Nixon (two recessions), Ronald Reagan (one recession), and George W. Bush (two recessions). Only Johnson and Clinton managed to escape their terms unscathed. While presidents have little control over the overall economy they are either praised for improving the lot of the American people or are blamed for any shortfall.

Some facets of the economy tend to matter more to voters than others, specifically unemployment, Gross Domestic Product (GDP), national debt, stock market performance and the national debt.

Unemployment
According to the data from the Federal Reserve Bank of St. Louis, three presidents since 1953 have closed out both of their terms with lower unemployment rates than when they started: Johnson, Regan, and Clinton (excluding Kennedy, whose administration saw unemployment fall 1% from the beginning of his term to his assassination.) Each of Eisenhower’s terms saw an increase in the unemployment rate of greater than 60%, while George W. Bush’s second term saw unemployment growth nearly double its first.

Gross Domestic Product
Since Truman took office in 1945, all reelected presidents saw GDP growth in each of their terms. However, real GDP growth was lower during the second term for all presidents after Franklin Roosevelt. The only exceptions were Reagan and Clinton.

National debt
The total amount of federal debt has continued to grow since 1940. The growth of the debt did vary, with the second terms of both Truman and Clinton showing-single digit growth rates, compared to double digits during their first terms. While Reagan did slow the rate of growth down during his second term, both terms had debt growth greater than 60%.

Stock Market Performance
Stock market performance, as measured through the S&P 500, has been mixed for presidents since Truman. Richard Nixon and George W. Bush both left office with the market losing value (both of Bush’s terms saw declines), while Reagan and Clinton left office with second-term stock market performance exceeding that of their first terms.

Consumer Confidence
The University of Michigan’s Consumer Sentiment Index showed declining confidence in the second terms of every president since Truman, with Nixon’s presidency marked by drops in confidence for each of his two terms. One underlying factor could be the growth in real disposable income, which has slowed down during the second term of every post-Truman president, save for Clinton.

The Bottom Line
History isn’t always doomed to repeat itself. Three presidents – Harry S. Truman, Ronald Reagan and Bill Clinton – left their time in office with the U.S. economy in arguably better condition than when their second terms started. Each of these presidents faced different struggles - post-war economic restructuring, recovery from double-digit inflation and a federal budget crisis, respectively - but left the Oval Office in better shape than when they gave the oath of office for a second time.